Smaller mutual fund dealers and industry giants have to cope with the same rules, whether they are independent or not, says Sandra Kegie, executive director of Toronto-based Federation of Mutual Fund Dealers.

For that reason, one of the first things she did on taking the helm in July 2005 was to change the name of the lobby group for mutual fund dealers to the FMFD from the Federation of Independent Mutual Fund Dealers.

The organization was created in 1996 to ensure small fund dealers had some say in the self-regulatory framework that was to become the Mutual Fund Dealers Association.

The “independent” part of the name, however, became crippling. “As time went by, I thought, ‘Why?’” says Kegie, a mutual fund dealer consultant who has a part-time contract with the FMFD. “The same rules apply whether you are bank-owned or insurance company-owned — or not owned by any other company”

The only difference between the larger and smaller firms is how they are able to handle the rules, she adds. Besides, the rate of amalgamations in the industry has changed it irrevocably, making the very notion of independence almost obsolete. “I thought this was restricting us too much,” she says.

She has a point. From a membership high of more than 40 members several years ago, the FMFD roster had dwindled to a mere four members when Kegie took the job. “They had decided that they would either fold the organization or give it another shot,” she says.

The booster seems to be having the intended effect. Today, the federation lists 33 members and has evolved into a more formalized agency, with a clear set of bylaws.

Kegie says, in many cases, expanding the membership was simply a matter of letting the dealer community know about the FMFD: “Part of its decline was a general decline in the knowledge across the country that we even exist.”

She recalls more than one meeting with top executives of smaller dealer firms who had no idea that there was a lobby group with their interests at heart, much less what it did. Kegie is convinced that members are again recognizing that there is a need for their own voice to be heard at the table.

The FMFD sees its role as twofold: lobbying the various industry committees and regulators to make sure members’ business models are taken into consideration in any initiative discussions; and educating its members on industry issues and the status of the discussions.

“We pass that information on so members get a better sense of the background of issues and why things are going the way they are,” she says.

In an adaptation of the “if you can’t beat ’em, join ’em” credo, members not only learn how to apply new rules that come down the pipe, but also learn why they’ve come into play in the first place.

“Members like that because, for the past little while — especially for smaller dealers — all they heard was, ‘Do this, do that’,” she says. “And when they asked why, no one answered.”

The FMFD is one of the key industry representatives in the registration reform project’s steering committee, with several of its members actively involved in the Canadian Securities Administrators’ ongoing initiative to streamline the registration regime for firms and individuals across Canada, says Kegie.

The bond goes back to the FMFD’s call to all mutual fund dealers, large or small, she says: “If the RRP goes anywhere, it will affect every dealer, no matter who you are, how big, how small, what you do, what your client base is. It won’t make any difference.”

The FMFD was also involved in the Portus Alternative Asset Management Inc. industry working group, regularly reporting developments back to members.

The FMFD uses e-mail and its Web site (www.fmfd.ca) to communicate regularly with members, which include the top executives at larger firms such as Berkshire Investment Group and FundEx Investments Inc. , and those heading smaller interests, such as Tenstar Financial Inc. of Waterdown, Ont., and Altimum Mutuals Inc. of St. Catharines, Ont.

The Web site will remain a key component, says Kegie. A members-only area contains meeting minutes, along with correspondence the FMFD has issued or received in any given year. For instance, a letter the FMFD sent to federal Finance Minister James Flaherty outlining its position on eliminating GST on mutual funds can be found in the section.

@page_break@The FMFD holds about nine meetings a year — which may be pared down, Kegie says — at which about 12 members participate in person and another dozen or so join in via conference call. So far, she has come up with most of the agenda items to be discussed at the meetings, but she’s hopeful that will evolve. “I can tell that members will participate more actively going forward than they did over the past year,” she says, adding that she saw the same progression with another organization she heads, the Association for Canadian Compliance Professionals.

The efforts by the FMFD appear to be paying off, Kegie says, and it is regaining some of the ground it lost in the eyes of various regulatory bodies. It doesn’t hurt that current chairman George Aguiar, president and CEO of GP Capital Corp. , is also a member of the MFDA board of directors. “It doesn’t change the reality, but it sets a tone,” she says.

The FMFD plans to expand its membership so it will enjoys even more clout with the MFDA and other regulatory bodies.

There are about 170 dealer firms across Canada and, although she admits it’s not realistic to have everyone aboard, the more advisors and assets under administration the FMFD represents, the more respect it will have from those who make the rules.

“There is currently a gap in the industry between regulatory initiatives and regulatory communication and how the dealers absorb this information,” she says. “It’s necessary to have something in the middle that can interpret.”

Kegie is optimistic about the future of the FMFD: “One of the things that is repeated, no matter where you go these days, is that the time for sitting back and whining about what’s going on and how unfair it all is is over.”

“Like it or not, the MFDA is something you have to deal with today, tomorrow and next year,” she says. “Do what you need to do to figure this out.” IE